Homework Answers
1. EOQ = SQRT(2 * ANNUAL DEMAND * ORDERING COST / HOLDING COST PER UNIT) = SQRT(2 * 100000 * 200 / 10) = 2000
2. ANNUAL HOLDING COST = (EOQ / 2) * HOLDING COST PER UNIT = (2000 / 2) * 10 = 10000
ANNUAL ORDERING COST = (DEMAND / EOQ) * ORDERING COST =
TOTAL COST OF MANAGING INVENTORY = ANNUAL HOLDING COST + ANNUAL ORDERING COST = 10000 + 10000 = 20000
3. REORDER POINT = DAILY DEMAND * LEAD TIME = (100000 / 250) * 5 = 2000
4.
|
# |
MINIMUM QUANTITY |
MAXIMUM QUANTITY |
UNIT COST |
HOLDING COST |
Q |
Q* |
AHC |
AOC |
APC |
TCI |
|
1 |
0 |
3999 |
10 |
10 |
2000 |
2000 |
2000 / 2 = 10000 |
100000 / 2000 * 200 = 10000 |
100000 * 10 = 1000000 |
10000 + 10000 + 1000000 = 1020000 |
|
2 |
4000 |
& MORE |
9.5 |
10 |
2000 |
4000 |
4000 / 2 = 20000 |
100000 / 4000 * 200 = 5000 |
100000 * 9.5 = 950000 |
20000 + 5000 + 950000 = 975000 |
DEMAND = 100000
ORDERING COST = 200
HOLDING COST = 10
EOQ = SQRT(2 * D * S / H), WHERE D = DEMAND, S = ORDERING COST, H = HOLDING COST = SQRT(2 * 100000 * 200 / 10) = 2000
ANNUAL HOLDING COST = (Q* / 2) * H
ANNUAL ORDERING COST = (DEMAND / Q*) * S
ANNUAL PURCHASE COST = DEMAND * PER UNIT COST IN PARTICULAR PRICE BRACKET
TCI = AHC + AOC + APC
OPTIMAL ORDER QUANTITY = 4000
TOTAL COST FOR OPTIMAL QUANTITY = 975000
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